At present, it is not possible to buy and sell goods and services using cryptocurrencies such as Bitcoin on traditional e-commerce sites like eBay and Amazon. But this is beginning to change as innovative, blockchain-based marketplaces, like BitBay, have begun to enter the market.
These platforms allow users to buy & sell both goods and services in exchange for payment in cryptocurrency. This is a big step forward in making cryptocurrency a viable ‘medium of exchange’, or ‘spendable’ - perhaps the most important of the characteristics that make money, money.
As well as allowing individuals and businesses to buy & sell goods and services using cryptocurrency, blockchain-based marketplaces offer several other advantages compared with traditional e-commerce sites.
Taking BitBay as an example, a double-deposit escrow system is used - in which both buyer and seller post collateral, to be held until both are satisfied that the terms of the contract have been met - to ensure that both parties enter into a transaction in good faith. This type of contracting system eliminates the need for a middleman to maintain trust between the buyer and seller.
Alongside that, BitBay operates a reputation system, to help participants assess the trustworthiness of others, and so inform decisions about how much collateral to place in escrow. The absence of a middleman means that there are no fees or commissions. The marketplace is free to use for everyone, always.
Another big advantage to blockchain-based marketplaces is improved security. Again, taking BitBay as an example, setting up an account does not require users to input any personal information at all. Any information that is relayed across the platform is peer-to-peer and encrypted.
This has two big benefits for users. The first is one of security. There is no risk that users’ personal information can be stolen, as none is required, and there is no central repository of information that might become the focus of an attack. This is in contrast to traditional, centralized e-commerce websites, which are often targeted by hackers in order to obtain banking details or other information that can be used fraudulently.
Hence there is no possibility that your personal information will be sold to third parties. Nor is there any possibility that data on your spending patterns can be harvested and made available to others.
Second, It respects your freedom & privacy. All is relayed through a peer-to-peer encrypted network with no central authority. The decentralized network is self-governed and without fees. Everything happens between users, so no centralized authority may enforce unfair rules, create administrative delays, enforce fees, or spy on users. As it’s decentralized, it’s not tied to a specific country or a business or a government agency so it’s a worldwide network (only an Internet access is required).
As well as blockchain-based marketplaces, there are some less well-known e-commerce websites with options to transact in cryptocurrencies. These are essentially an adaptation of a conventional online shopping site. As such, they are centralized and so are vulnerable to many of the risks surrounding security as established e-commerce websites.
Limitations of traditional e-commerce sites
The range of things for sale on traditional e-commerce websites is also limited to what sellers choose to list. Whereas, with BitBay, if a particular good or service is not listed, buyers have the option of holding a reverse auction. A reverse auction is essentially a personalized tender process, in which vendors compete on price to be the supplier. In fact, the BitBay contracting system has numerous applications and can be customized to facilitate bartering, time-locking, and will-making, to name but a few.
Quite apart from all these upsides to using a blockchain-based marketplace, there are many other reasons to choose to hold cryptocurrency rather than fiat currency. Cryptocurrency gives the owner of those funds complete control over them. They can be sent to anyone, anywhere, at any time, at a very low cost.
The cost of transferring BAY, the native currency of BitBay, is currently a little around a tenth of one cent, regardless of the size of the transaction, or where in the world those funds are being sent, with confirmation of transfers happening in moments, rather than hours (or even longer). No banks or payments systems involved, and no charges.
On top of that, in the case of BitBay and some others, coins can be ‘staked’. This can be thought of as rather like the cryptocurrency equivalent of saving (and is the subject of another article here). Very briefly, by staking coins users are able to participate in the confirmation of transactions on the blockchain - or changes to ledger of ownership. The more coins that are staked, the more likely it is that a user will be rewarded for confirmations. The coins remain safely stored in the user’s wallet, while passively earning a return.
Investing in crypto
What’s more, in addition to the returns from staking, investing in cryptocurrency offers the prospect of significant capital gains in dollar terms, if those crypto-assets appreciate in value. Of course, as with all financial investments, cryptocurrency carries risk, and the value of coins can fall as well as rise. But for many people, the potential upside to investing in cryptocurrency is considerably more appealing than continuing to hold their savings in conventional, fiat, currency, the real value of which is steadily eroded over time by inflation while crypto’s value has been continuously growing since the last years and is still expected to grow.
Lastly, there is the simple fact that using blockchain-based services and investing in cryptocurrency is a way to support a revolutionary, transformative, new technology, operated by the people, for the people. The team behind BitBay works a lot so that one day it will grow to be a fully-fledged economy on the blockchain - a wide-scale self-sustaining marketplace for buyers and sellers of all types of goods and service, without middlemen, without fees, without barriers.